Contracts are strictly construed, which means that what it says is what it means. Although there are situations where the courts will try to extrapolate the original intent of the parties from parol evidence, most claims are limited to the four corners of the contract.
Therefore, the language that you put in a contract is critical to ensure that the rights and obligations of each party are clearly defined. Let’s consider eight solid areas to double-check when reviewing a contract below:
A contract is an agreement comprised of three primary elements: offer, acceptance, and consideration. Aside from these elements, there are five other key factors to double-check.
Offer
The offer details the terms and conditions by which the other party or parties are bound to the agreement. For example, someone can offer to repair a home for a quote of $10,000.
Acceptance
Acceptance is made when the other party or parties agree to the specific terms and conditions of the offer. Therefore, in the above example, when someone signs a contract, they are agreeing to pay $10,000 and other reasonable expenses for the completion of the home repairs.
Consideration
The final element is a consideration, meaning that the contract exchanges something of value. A contract to count sheep tonight, for example, is not enforceable because it does nothing to benefit one party or another and would not provide consideration for a court to consider it if a dispute arises.
Capacity
The capacity of the parties signing the contract is another important factor. The parties must be of legal age and sound mind to sign any binding agreement. Otherwise, the contract is null and void. Furthermore, a party acting as a representative of a corporation, for example, must be authorized to act in that capacity for the agreement to be binding on the corporation.
Awareness
Awareness is another key factor in the quality of the agreement’s terms and conditions. If an explicit contract is clearly spelled out, then it would be difficult for one party to argue that they misunderstood the nature of the contract and are not bound by any obligations spelled out therein. A contract of any sort must show a meeting of the minds and that an agreement, formal or informal, was made.
An express contract will supersede any oral, implied, or quasi-contract (which many courts argue is not a contract at all). Therefore, when contracts are expressly spelled out, the parties benefit when the clarity demonstrates a meeting of the minds.
Legality
Legality is another issue that contracts sometimes run into when disputes arise. No matter how clear the language of a contract may be, it is impossible to enforce an agreement that is patently against the law.
For example, Exxon cannot enter into an agreement and enforce its rights to drill on a federal reservation if environmental laws are thereafter passed to protect those lands.
Ambiguities
Ambiguities and spelling are other aspects of a contract that should be thoroughly reviewed before formal signatures validate it. Minor ambiguities in a contract can sometimes be resolved with parol evidence. Parol evidence is external evidence that demonstrates what the parties actually intended at the time of signing.
However, if it is unclear what exactly a party promised for a payment, for example, then they may be able to use the contract to protect their position if a reasonable interpretation supports it.
If a party promises to provide landscaping services to trim hedges every weekend unless they do not require trimming, there may be an ambiguity about when exactly hedges need trimming. Is it when they have become overgrown or when any bustles appear that mar the uniform appearance?
Misspellings
Misspellings can lead to similar ambiguities and questions about the original intent. While there are ways to add clauses to a contract to protect against errors and omissions, it is better to avoid errors and omissions in the first place.
Published by: Nelly Chavez
